U.S./Saudi defence mega-contract

President Donald Trump of the United States and King Salman bin Abdulaziz Al Saud of Saudi Arabia yesterday (20 May) signed defence contracts worth U.S.$110bn, or more than double the French military budget for 2016. A record package that demonstrates, according to a White House statement, “the importance of working jointly to address challenges to regional peace and security, including defeating ISIS and al-Qa’eda, countering Iran’s destabilising activities, and resolving conflicts in Yemen and Syria.”

Signature of the “mega-contract” by US President Donal Trump and King Salman bin Abdelaziz Al Saud (Credit: White House / Shealah Craighead)

This mega-contract “bolsters the Kingdom’s ability to provide for its own security and continue contributing to counterterrorism operations across the region, reducing the burden on U.S. military forces,” added the White House.

But in the longer term, these agreements will also support the creation of a local defence industry in Saudi Arabia, a key element of the Vision 2030 programme launched in 2016 by Deputy Crown Prince Mohammad bin Salman Al Saud to diversify the Kingdom’s economy away from its troubled petroleum sector. The world’s fourth-largest arms importer in 2016 with spending set at $63.7bn (€56.3bn), Riyadh aims to spend 50% of its defence budget locally by 2030, compared with only 2% at present.

Among the lucky winners of the mega-contract signed yesterday: Lockheed Martin and Raytheon. The former, with contracts worth $28bn (€25bn), won the lion’s share and will notably assemble 150 S-70 Black Hawk helicopters through a joint venture with the Saudi company Taqnia. The U.S. giant will also provide an unknown number of THAAD (Terminal High Altitude Area Defense) anti-ballistic missile defence systems, recently deployed in South Korea by the U.S. military.

While Raytheon did not specify the amount of agreements signed with the Kingdom, these include, among others, air defence systems, C4I * systems, smart munitions and cyber security tools to protect Saudi platforms and defence systems. Finally, BAE Systems was not forgotten with, according to our colleagues at Reuters, the potential sale of M2 Bradley infantry fighting vehicles and M109 self-propelled guns.